Barratt Redrow has clawed back £38m from subcontractors over defects on legacy developments, helping offset mounting building safety costs as the house builder prepares to double remediation spending to £300m this year.
In a year-end trading update this morning, Britain’s biggest house builder highlighted the growing financial impact of legacy building issues, with the group taking an additional net legacy property provision charge of around £95m, alongside £13m of extra charges linked to joint ventures.
These costs were partly offset by the booked recoveries from subcontractors responsible for defects on legacy developments, although Barratt Redrow also incurred £14m of legal costs pursuing third-party claims.
Cash spending on building safety work is also set to accelerate sharply after regulatory approvals and construction delays held back remediation programmes in the last financial year.
Legacy property work spend reached around £155m in the last 12 months, roughly £100m below initial expectations.
But this morning Barratt Redrow said this is forecast to jump to £300m this year before rising again to £450m in the year 27/28.
Despite these substantial liabilities, the group said its balance sheet remained strong enough to support a major increase in shareholder distributions.
It will replace ordinary dividends with share buybacks, returning around £400m to investors in a share buyback programme launched today and a nominal 1p-a-share dividend.